Rig Contract Finalized for Beibu Gulf Exploration

The Block 22/12 Joint Venture has finalized a rig contract for Premium Drilling's Murmanskaya jackup. The rig will drill four exploration/appraisal wells starting in mid-December in the Beibu Gulf located offshore China. The first two wells will test the Wei 6-12 West and Wei 6-12 East structural-stratigraphic prospects, 2.5 kilometers and 1.7 kilometers, respectively, from the 2006 Wei 6-12-South oil discovery.

The Block is in an area of known oil fields. The nearest producing field is Wei 12-1 (production from Weizhou Formation), 1,800 meters from the block boundary. The Wei 12-1 field includes a well which yielded one of the highest oil flows encountered anywhere in China: 34,000 bopd. There are six undeveloped oil accumulations in the Block: Wei 12-8 East, Wei 12-8 West, Wei 12-2, Wei 12-3, Wei 6-12 and Wei 6-12 South.

Participants in the joint venture are Roc Oil as operator with 40%; Horizon Oil with 30%; Petsec Petroleum with 25% and Oil Australia Pty ltd. with the remaining 5%. The Chinese Government has a back-in entitlement of up to 51% equity in field development.

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